For a university drop-out who used to hawk beach snacks to hungry hippies in Goa, a million-dollar literary advance is no small thing. But the first-time novelist Arundhati Roy, 37, who launched her book The God of Small Things in India this week, never questions the worth of her words. "It's their business risk," she shrugs. "I trust my book."

Her 340-page volume will soon appear in 16 different languages in 19 countries. But the hysteria surrounding Ms Roy's debut, which instantly propels her into the most exalted ranks of Indian fiction writers, alongside Salman Rushdie and Vikram Seth, doesn't seem to faze this tiny woman with glittering black eyes. "It's my own way of seeing," she explains. "It took me 36 years to write, really, but practically speaking, in a hopelessly practical world, it took about four-and-a-half years in front of my first computer."

The result is a story about one day in the life of a south Indian girl, Rahel, during which a cousin's death alters everything. The girl's mother's inter-caste love affair is brutally terminated as a result, and her twin brother is banished. Paradise Pickles, the family business, flounders. Written with an ear for the humming repetition of playful or incantatory phrases, and a child's eye for disturbing or pretty details, the book is preoccupied with the need to hold on to love, and suffused with a sense of place - a backwater village in Kerala state, hard by the Arabian Sea.

"Kerala is small, and tightly packed. Really densely populated. It is so hot there. And a lot of the people are physically beautiful," Arundhati Roy says. "As to who should be loved, and how, there's almost no sexuality involved. Biology has been subdued. There are love laws."

Arundhati Roy's book has already been labelled a masterpiece by excited members of the publishing world. The rights were auctioned by her British agent, David Godwin, for $250,000 in the UK and $160,000 to Random House in New York, and lucrative deals for translation rights quickly followed. Godwin was alerted through Punkaj Mishra, a young reader in the Delhi branch office of HarperCollins, who took the manuscript along on a train trip and, overcome with excitement, broke the journey midway to telephone his congratulations to Roy. After reading a sample chapter in London, Godwin booked the first flight to India on impulse. He tracked down the writer at the top of a narrow New Delhi stairway that spirals as tightly as the obsessive twists in her tale, and signed her up on the spot. "Once it got into their hands, it is as if all was done by a machine - well oiled and running smoothly," Ms Roy says, shaking her curls in disbelief.

She looks simply too cute to fit the role of literary genius. At a reading of her book to the Delhi literary set, the year's smartest British Council do, she appears girlish and unprepossessing in a white ribbed T-shirt and black jeans. Without her daily aerobics she would be seriously scrawny instead of fine-boned. Her diamond nose-pin winks in the spotlight and her hair grows curlier as she tells more of her tale. There is obvious joy in her wordplay: a character expires at a "viable, die-able age". As the guest of honour, Ms Roy squats down on the floor during the formal cocktail party, scrawling autographs on a pile of books proffered by admirers. It is easy to picture her as the book's heroine: Rahel, the Stick Insect, dark-skinned, with incipient horns on her forehead, watching and measuring everything, and reading words backwards when she pleases.

"We have all endured the amorphous terrors of childhood," Arundhati Roy says earnestly, perfecting a soundbite for next month's book tour of North America, and obviously rather uncomfortable with her sudden fame. "This book is about that. There are emotional extremes, and the feelings are real. Of course, the public response should make me happy, and I am making an effort - but the sadness of the book stays with me."

When Arundhati Roy gets quizzed on how autobiographical her novel is, she sighs and speaks of "emotional texture". "It's the reason why writers flirt with insanity; every character has a bit of you in them."

What eluded her during the writing process was structure. But after about two years of randomly tapping out memories and impressions to fill up the blank screen, the former architecture student got out her old pens and made a literary blueprint for herself. "I woke up and sketched the plot graphically with a series of drawings. That's when I understood what I was getting at." She dredged up her own childhood as a minority Syrian Christian in the deep south with a marked intensity, and even included her first coherent written sentence, pencilled in a lined notebook at the age of five. "It was about this Australian missionary lady, who kept telling me 'I can see Satan in your eyes', " Arundhati laughs. "I wrote 'I hate Miss Mitten and I think her gnickers [sic] are torn'."

Her account of childhood is not sentimentalised. It feels acutely real. In one scene, Rahel, her twin brother and a cousin from London kill an entire colony of red ants, one by one, with a heavy rock which is soon covered with a mulch of severed legs and insect blood. The new arrival from London is less squeamish than the twins presumed. "Let's leave one alive so it will be lonely," she suggests brightly. They pause to consider, but are compelled to kill the last ant anyway.

Ms Roy, who was briefly an actress after living in a tin-roofed shack in a Delhi slum, also brings the discipline of writing dialogue for screenplays to this novel. Her film Electric Moon, which became a 1992 Channel 4 production, spoofed game-park tourists, erstwhile royals, social pretence, and ecology. It managed to offend nearly everyone who saw it, but eventually drew a cult following. An earlier film, And Annie Gives Them Those Ones, depicted the chaotic lives of architecture students in New Delhi, of whose ranks she was once a member, down to the last slangy cadence. "But I felt limited by cinema. I love words. I wanted to crawl around inside my skull and heart," she says.

The new author will not admit to any literary heroes or influences, other than Harper Lee's To Kill a Mockingbird, which happened to be on her school's required reading list. "People's response to my book is refracted through adulation and hostility. I don't know the rules of literature and so I didn't know I was breaking them," she says with a certain defiance.

While Arundhati Roy was writing, she hid everything from her partner Pradip Krishen, a photographer, and from all her friends, afraid she would talk the tale out. When she showed Krishen her last draft, which he said he adored, she accused him of lying just to please her. She admits that, more than anyone else in her experience, she is finicky, "well, about small things". In every new contract, absolute control over design of the book, its dust jacket, the weight of the paper, is her primary demand. In order to meet her exacting standards in India, friends set up a new publishing company called India Ink.

After completing The God of Small Things, Arundhati Roy swears she will not write another. "I have no plans to compete with myself. I probably won't write another book until I am 90. I don't know if I'll be a full- time anything. I only do one thing at a time"n

Excerpts from 'The God of Small Things' appear in the latest issue of 'Granta' magazine. The book will be published by Flamingo in June.